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The Board’s Role in Repositioning

September 18, 2017 | by David Tobenkin

Repositioning, often necessary for long-term survival, presents an opportunity for a board to revisit its mission and its assumptions about organizational identity. The process, while necessary, is not always comfortable.

Repositioning an aging services provider through major changes such as updating target markets, a new building, or changing its basic operational approach, can be an acid test for its board of directors. Such changes can throw a board into unfamiliar, often uncomfortable, territory that requires vigilance as to both what to do and not do.

Ideally, consideration of whether a repositioning is warranted in the first place should start with an examination of whether the organization’s offerings, such as its facilities and programs, are attractive to the consumer, says Scott Townsley, managing principal at Trilogy Consulting LLC, a senior living consulting firm based in Florida and New Jersey. “If not, then the decision is whether to simply re-do or refurbish the community or campus, or whether to reposition, such as by a more significant transformation or changing of the target market.”

Repositioning may lead to an examination by the board of the organization’s core purpose, which may not be the same as its mission, Townsley says.

“Core purpose defines why an organization pursues its mission,” Townsley says. “An organization’s mission may change over time, but if you have clarity regarding your core purpose, while the mission may change, you will still fulfill your core purpose. The way to go about this is to ask the board or a similar leadership group what it is that the organization does in simple terms, eliminating lofty or ethereal words. You say, ‘We are a retirement community.’ But why do you do that? If you keep asking that question you get to the soul of the organization.”

Townsley recalls the board retreat of a healthy aging services provider with a divided board. Some members desired to expand the organization’s mission and reach while others, including staff executives, wanted to continue operations and the focus as they were.

“In about 10 to 15 minutes, the group identified its core purpose—to ‘release the power and joy in aging,’” Townsley says. “Those words emerged because the discussion, to that point, had been about the negative aspects of aging, or thinking of aging as a disease. That gave even those opposed to the expansion space to do a lot more. The strategy turned from ‘Should we expand?’ to ‘How can we expand?’”

The Range and Roles of Repositionings

Repositionings usually involve marketing and image-related changes, can sometimes mean name changes, and often involve building something new and/or renovating old buildings or campuses.

Until 2016, Virginia Baptist Homes had run 19 straight years of operational losses, and suffered from aging demographics and older facilities. If there was a positive side to that situation it was that there was near-unanimity on the board that major changes were needed, says President and CEO Jonathan Cook, who was hired in December 2014 with a desire to reform the organization, which has since been renamed LifeSpire of Virginia. Cook and his vice president of marketing, Peter Robinson, led a renaming and rebranding of the Richmond-based organization, raised $120 million to invest in its key facilities, and stressed more efficient operations to reduce costs, an effort that resulted in a small $231,000 operating surplus in fiscal year 2016.

LifeSpire’s repositioning included a renaming that was difficult for some. A board member who had been through his own renaming experience helped make it work. Photo courtesy of LifeSpire.

While to some extent the proper roles of the board, executive leadership, and consultants when evaluating and executing a repositioning vary by organization, there are some typical patterns.

Some say the discussion as to whether a repositioning is merited should begin with staff leadership. “The staff leadership must initiate the conversation about repositioning,” says Alvin Loewenberg, the former CEO of San Antonio, TX-based provider Morningside Ministries. The organization did a repositioning that began around 2000 and continued through 2016, helping put the organization on more solid financial footing and expanding its scope.

“Obviously, the board and staff must work together to facilitate repositioning and to see that it is carried out in the best format and that the outcomes are what are needed,” Loewenberg says. “However, in my experience, board members seldom have the background or know the trends in older adult services.”

That was particularly the case for Morningside Ministries, which was a financially sound, conservative organization when it decided to expand and modernize.

“We had to pitch why it was necessary to expand to a larger group of people, expand the mission, and enter into a different area that would attract higher-income people to help fund our charity efforts,” says Loewenberg.

For Morningside Ministries, the fulcrum that would make expansion possible was one that would force the organization to confront its identity. Long targeting service to lower- and middle-income residents funded through rental income, the financial engine that would drive growth and the ability to better serve all residents would be entry fee incomes of $300,000 to $350,000 per new residents for cottages aimed at more affluent seniors through a new development at Menger Springs in Boerne, TX. (Most of those entry fees are returned to the residents or their estates upon their departures from the community).

But first the organization needed to expand its interpretation of its mission. “When Morningside Ministries embarked on the plan and building of the Menger Springs campus, there was concern on the board because this campus would be serving a higher-income population,” Loewenberg says. “Even though there was nothing in writing that stated Morningside served middle and lower incomes, it was understood by board members, perhaps because of the organization’s religious affiliation, that we did not have a mission to serve the higher-income populations. If we had not repositioned, the organization would have had a tough time surviving. Because we served a large number of low- and middle-income people, there had to be another revenue source to help fund these services. The board began to understand that our mission was to serve all older adults in a caring and compassionate way through a faith-based, nonprofit organization.”

While management in many cases initiates discussions on repositionings, that is not always the case. “It’s typically management, but I’ve also seen a board or a committee, or even an individual board member, plant the seed,” Townsley says.

Sometimes board members can offer critical experience and perspectives that can assist the rest of the board in making a decision. Among the most critical decisions for Virginia Baptist Homes was whether to change its name to LifeSpire of Virginia to make the community more inclusive and less denominational by eliminating the words “Baptist” and “Homes,” given the latter word’s negative connotations for many in the aging service context. While a professional survey of impressions regarding the 3 key words in the existing title and the proposed new title by prospective residents was important, so was the experience of Nelson Harris, a board member and former mayor of Roanoke, VA, notes Cook.

Harris was, and is, also pastor at a local Baptist church. The church had gone through its own successful repositioning 2 years earlier that involved renaming itself from Virginia Heights Baptist Church to Heights Community Church for similar reasons.

“Whenever a board goes through a significant change like that there is always some hesitancy … due to the risk and the identity invested in the existing name,” says Harris. “I was able to bring at least a voice of real experience to a board that was wrestling with, ‘Do we want to change identity and drop Baptist,’ which was significant given this board is composed of people pretty committed to their local churches.”

LifeSpire’s board also appointed Harris and 2 other board members to directly participate in the evaluation of the repositioning proposal, Cook says. This helped assure the board’s voice was heard, Cook and Harris say.

Making a Decision

Obviously, the support of a majority of the board will be necessary for any repositioning, but a mere majority of supporters could place the repositioning in jeopardy if unexpected challenges occur midway through, Townsley says. While board unanimity is not necessary to commence a repositioning, a general board consensus is, Townsley says.

It is important for the board to focus on problem-solving and to stay true to the repositioning’s vision, despite unexpected difficulties, second thoughts, or board composition changes, Townsley says.

“A common mistake is incrementalizing what is needed,” Townsley adds. “Boards are sometimes scared off by a $100 million repositioning so they instead do a $20 million repositioning and agree to look at it again in 5 years. But like a bridge that only extends halfway across a river, a ‘half repositioning’ doesn’t get you anywhere if it doesn’t solve the problem and address the community’s needs.”

Managing Repositionings

Generally, management is the point of contact for involving residents in the repositioning and for fielding concerns about the same. But there are some key areas where board involvement can be very important. Board participation in informational events about the repositioning can be important in conveying board support for, and enthusiasm for, the necessary changes and conveying the benefits. Some board members have special ties to one or more communities of an aging service provider and their word of support for the repositioning can be highly useful in generating enthusiasm and allaying concerns.

Cook says the participation of board members like Harris was particularly important to convey that Virginia Baptist Home was not being sold, was still nonprofit, and still had faith-based values. On the other hand, it is not helpful for the board to micromanage decisions or interfere in more objective selections, Loewenberg says.

David Tobenkin is a freelance writer based in the greater Washington, DC, area.